What happens after the ICOs?
Every ICO token investor asks the same question. You researched about the ICO, read reviews and spent a lot of time analyzing everything there is about the ICO. You’ve now participated in the ICO, and it’s over. What next? Here are the series of events that follow after the ICO closes.
Tokens are distributed
Most startups pre-mine a huge number of their maximum tokens before the ICOs. An increasing trend shows that most ethereum tokens are pre-mined. As such, investors get a chance to invest in more than half of the total tokens to be distributed by the startup at the time of the ICO. In general, a startup will distribute their ICOs in the following manner:
- A portion goes to investors
- A portion of the tokens is shared among the advisors and management team
- A set of tokens are locked as bounty to computer geeks who detect bugs and security threats in the platform in the future
- Some startups distribute a portion of their tokens to charity
- Tokens not purchased at the time of ICO are burnt or locked
After distribution, investors store their tokens in personal wallets whereas the founders and advisors have their tokens locked for a specified amount of time. There are reasons why ICOs lock tokens meant for the development team. One reason is to show credibility to investors.
If an ICO distributed over half of their tokens to the development team and released them immediately, most investors will avoid the company. It comes almost obvious that the team would dump their coins soon afterward and the project would be abandoned. If the project is not abandoned, the value of the ICO token will go down, and investors would struggle to make profits.
Development of the Platform Begins
Cryptocurrency startups sell their tokens in exchange for established cryptocurrencies to get money to develop their project. Some startups usually have already started their project but need more funds to complete it. A few startups usually have already completed the project and only raise more funds for reasons such as PR.
For most startups, the end of an ICO signifies the beginning of developing the platform promised in the whitepaper. If the ICO promised to build an app that will help shoppers identify fake products, development of the app begins. If the ICO was about building decentralized applications, the developers would commence their work. The project’s development period is usually specified in the whitepaper. It ranges from one month to one year.
A Github repository is extremely important to ICO founders. They will need it to post the development phases of their project. Investors will often ask questions about the project’s progress on a daily basis. And it’s only important to provide the right answers on a repository where they can check, review and evaluate the ICO results.
Apart from releasing a minimum viable product, startups spend the next few weeks after the ICO communicating with advisors, stakeholders and investors to ensure everything works fine. They need advisors to help them know which exchanges to seek listings on.
They need managers and marketers to kickoff promotional campaigns for the products. They also need to constantly communicate with investors if their platform’s reputation is to be upheld. The main communication channels for startups in the blockchain industry are:
- Email support
- YouTube Videos
- Forums- bitcoin talk and Reddit are major forums where legitimate startups run their threads
- Blogs- startups tend to have a blog where they communicate any relevant information about them
Telegram and twitter are the two most popular communication channels. Legitimate startups hire professionals to run the respective channels. If a startup stops communicating through either channel after receiving funds from investors, you should get worried. Legitimate startups continue to communicate for as long as they are willing to push for adoption of their product.
Some startups heighten their project’s promotion campaign through paid adverts, interviews and events. In fact, some allocate a portion of their ICO funds to individuals willing to hold an event promoting the project. Others go the extra mile of translating everything about them and launching new campaigns in Chinese, Korean and Japanese markets.
Startups Seek Listing on Exchanges
One of the biggest challenges a cryptocurrency startup must overcome after the ICO is to get listed on a credible exchange. Investors will be on the lookout to find an exchange where they can trade the ICO tokens. The best exchanges have regulations and specific criteria for admitting new tokens. In general, the founders have to apply for the listing.
Some exchanges will list tokens even without the founders’ consent. An exchange like Etherdelta allows members to make offers about any cryptocurrency. If there is a willing buyer for the tokens, they can trade without any other regulations.
Investors Dump the Tokens
It happens every time after an ICO. Most investors are usually after the short-term gain of ICO tokens. Once the tokens are listed on exchanges, their demand goes up. Investors take the opportunity to sell some of their tokens to make profits. Some investors, however, hold onto their tokens hoping their value will gain grow in the long term. A recently launched ICO by JSECoin has taken a bold step and kept only 5% for the founders & advisors which is remarkable in this industry.
Campaigns to adopt the Technology Increase
Startups don’t stop promoting their platforms after getting listed on exchanges. If anything, that’s when their campaigns heighten. The founders and managers usually have thousands of ICO tokens locked up somewhere. If they fail to promote their product, the tokens may never gain any value. Again, most companies charge customers fees to use their platforms. The founders have to promote their services for the same reasons.
How successful a project becomes is determined by the value of the project and how well it is promoted. The more a project is promoted, the more customers adopt its services. With increased interest in the platform, the startup’s tokens also gain value. In the end, both the startup and investors win if everything is executed according to plan.
Although every aspect of a cryptocurrency is important, what happens after they receive ICO funds is the most important bit. The company’s project can only succeed if the funds are properly utilized and if the project is promoted properly. The period after the ICO is also important to investors who must stay keen to ensure the project they backed with their funds succeeds.